11-08-2012, 12:24 PM
Investors’ Preference towards Mutual Funds in Coimbatore City
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Abstract
There are a lot of investment avenues available today in the financial market for an investor
with an investable surplus. He can invest in Bank Deposits, Corporate Debentures, and
Bonds where there is low risk but low return. The recent trends in the Stock Market have
shown that an average retail investor always lost with periodic bearish tends. If the invests
in Index Funds, they foregoes management risk, because these funds do not employ
managers. The following are the objectives of the present study,1. To find out the factors
influencing the respondents to prefer mutual funds in Coimbatore City and.2. To study the
attitude of the investors towards investment on mutual funds in Coimbatore City. In the
present study an attempt has been made to study the attitude of the investors towards
investment in mutual funds in Coimbatore City. The study aims at finding out the attitude
of the investors towards investment in mutual funds in Coimbatore city. The primary data
was collected from the investors of mutual funds with help of the questionnaire. The
secondary data were collected from the books, records and journals. By adopting
convenience sampling, 250 respondents were selected for this study. Findings of the study,
A good majority of the remaining respondents were distributed in the Degree
qualifications. 8 percent and 8.80 percent of the investors have Diploma / ITI and up to
HSC qualifications respectively. Suggested this study, One should take a look at the
portfolio of the funds for the purpose. Excessive exposure to any specific sector should be
avoided, as it will only add to the risk of the entire portfolio. Most of the investors rely on
investment consultants to choose the right fund for them. They monitor their investments
periodically. They find a need to increase the public awareness of mutual funds
Introduction
There are a lot of investment avenues available today in the financial market for an investor with an
investable surplus. He can invest in Bank Deposits, Corporate Debentures, and Bonds where there is
low risk but low return. He may invest in Stock of companies where the risk is high and the returns are
also proportionately high. The recent trends in the Stock Market have shown that an average retail
investor always lost with periodic bearish tends. People began opting for portfolio managers with
expertise in stock markets who would invest on their behalf. Thus we had wealth management services
provided by many institutions. However they proved too costly for a small investor. These investors
have found a good shelter with the mutual funds.
European Journal of Social Sciences – Volume 29, Number 1 (2012)
Mutual fund industry has seen a lot of changes in past few years with multinational companies
coming into the country, bringing in their professional expertise in managing funds worldwide. In the
past few months there has been a consolidation phase going on in the mutual fund industry in India.
Now investors have a wide range of Schemes to choose from depending on their individual.
Mutual Funds and Its Working
There are a lot of investment avenues available today in the financial market for an investor with an
investable surplus. He can invest in Bank Deposits, Corporate Debentures, and Bonds where there is
low risk but low return. He may invest in Stock of companies where the risk is high and the returns are
also proportionately high. The recent trends in the Stock Market have shown that an average retail
investor always lost with periodic bearish tends. People began opting for portfolio managers with
expertise in stock markets who would invest on their behalf. Thus we had wealth management services
provided by many institutions. However they proved too costly for a small investor. These investors
have found a good shelter with the Mutual funds.
Mutual fund industry has seen a lot of changes in past few years with multinational companies
coming into the country, bringing in their professional expertise in managing funds worldwide. In the
past few months there has been a consolidation phase going on in the mutual fund industry in India.
Now investors have a wide range of Schemes to choose from depending on their individual profiles.
Statement of the Problem
Mutual funds have their drawbacks and may not be for everyone. No investment is risk free. If the
entire stock market declines in value, the value of mutual fund shares will go down as well, no matter
how balanced the portfolio. Investors encounter fewer risks when they invest in mutual funds than
when they buy and sell stocks on their own. However, anyone who invests through a mutual fund runs
the risk of losing money. All funds charge administrative fees to cover their day-to-day expenses.
Some funds also charge sales commissions or “loads” to compensate brokers, financial consultants, or
financial planners. When he invests in a mutual fund, they depends on the fund’s manager to make the
right decisions regarding the fund’s portfolio. If the invests in Index Funds, they foregoes management
risk, because these funds do not employ managers. Though these are the problems in the investment of
mutual funds, in the recent days most of the investors preferred to invest their funds on mutual funds.
In this background, the research has made an attempt to study the investors’ preference for mutual
funds in Coimbatore City.
Need for the Study
This paper provides Future of Mutual Funds industry information as well as awareness level amongst
people for Mutual Funds. Also this project report of Mutual Funds gives an outlook to management as
to how the mutual funds are performing in the current market situation as a result what may be the
future of this industry.
This paper on mutual funds is informative the students who want to understand and undertake
assignments in the industry. This study also facilitates the general people who can understand the
importance and explore the new option for investment in Mutual Funds. Different financial institutions
provide services that are both complementary to and competitive with each other. A well built financial
system directly contributes to the growth of the country.
Objectives of the Study
The following are the objectives of the present study.
European Journal of Social Sciences – Volume 29, Number 1 (2012)
1. To find out the factors influencing the respondents to prefer mutual funds in Coimbatore
City.
2. To study the attitude of the investors towards investment on mutual funds in Coimbatore
City and
3. To offer suitable suggestions to improve the scope of the market of mutual funds.
Testing of Hypothesis
In order to examine the attitude level of the respondents towards investment in mutual funds, the
following null hypothesis has been formulated and tested. The demographic variables of the
respondents such as gender, age, educational status, occupation and income will not have any influence
on their attitude with the investment in mutual funds.
Scope of the Study
In the present study an attempt has been made to study the attitude of the investors towards investment
in mutual funds in Coimbatore City. The scope is limited to some prominent mutual funds in the
mutual fund industry. I analyzed the funds depending on their schemes like equity, income, balance.
But there is so many other schemes in mutual fund industry like specialized (banking, infrastructure,
pharmacy) funds, index funds etc. mainly concentrated on equity schemes, the returns, in income
schemes the rating of CRISIL,ICRA and other credit rating agencies.
Research Methodology
This study is descriptive in nature based on survey method. The study aims at finding out the attitude
of the investors towards investment in mutual funds in Coimbatore city. This study was based mainly
on primary sources. The primary data was collected from the investors of mutual funds with help of the
questionnaire. The secondary data were collected from the books, records and journals. By adopting
convenience sampling, 250 respondents were selected for this study. The essential data were collected
with the help of questionnaire. The data collected from the period of January 2011 to April 2011.
Framework of Analysis
The understanding of the attitude of investors towards investment in mutual funds may help the mutual
funds companies to formulate strategies for further expansion in their field. The attitude level of the
respondents can be examined with the help of their demographic variables. In order to study the
attitude of the investors with the investment in mutual funds, various statistical tools such as chi-square
test, analysis of one-way variance, and analysis of co-variance have been employed. The chi-square
test and analysis of one-way variance have been employed to study the relationship between the
demographic variables of the respondents and their satisfaction with the investment in mutual funds.
The co-variance has been employed to find out the variations in the satisfaction of the respondents with
the investment in mutual funds.
Limitations of the Study
The study has the following limitations.
1. Any study having a bearing on attitude, incomplete, wrong information and non-responses
to some questions cannot be avoided; however, the researcher took utmost effort so as to
minimize such errors.
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2. Due to paucity of time and the resources available, the study was restricted to 250
respondents only.